Outsourcing customer service can have many benefits. It can increase the availability of customer service agents and improve the quality of interactions. The significant tradeoff required is the reduction of hands-on control over the process.
To determine whether this tradeoff will be worth it to your business, it is essential to figure out the cost. Outsourcing your customer service should save you some money, but whether it will save you enough to be worth the reduction in direct control will be determined by the price.
What is Outsourced Customer Service?
Let’s get our definitions straight. Many times when people refer to outsourcing, they are referring to moving American jobs to less expensive international locations. However, this is not the actual definition of outsourcing and is more accurately called “offshoring.” Outsourcing is the process of having an outside supplier provide a business function rather than doing it internally. This can be done with companies inside or outside the United States.
Offshoring is not the only way to outsource your customer service. Many businesses outsource their customer service to companies within the United States. There are tradeoffs to either approach.
What Will Determine the Cost of Outsourcing?
There are a number of factors to consider when trying to determine the cost of outsourcing your customer service. Here are some of the most important:
Where will my agents be located? – International locations such as India and the Philippines offer significant cost savings, but there are tradeoffs. The time difference can make it difficult to communicate with your customer service teams. Additionally, there can be a gap when it comes to language and cultural understanding.
What is the volume of traffic I am outsourcing? – Volume is one of the most important cost considerations. The exact total volume of calls is, of course, impossible to predict, but an estimate of volume can be calculated based on past trends.
How are my customer service agents communicating with customers? – When talking about customer service, most people think of taking calls. However, there are other types of customer service interactions such as online chats and outbound calls. Each of these will have a slightly different cost attached to it.
What is the nature of the customer service interaction? – Customer service that requires a high level of technical expertise or nuance will cost more than more straight-forward customer service interactions. You will also need to consider how many types of products and types of interactions the customer service representatives will need to be able to deal with.
What is the level of training required? – If a customer service center already handles interactions that are similar in nature to those you are outsourcing, the cost for training will be quite low. However, if this is a process that will be completely new to their customer service representatives then you can expect the cost to be higher.
What Is the Deal Structure for Outsourcing Customer Service?
There are a number of ways to structure customer service outsourcing deals. There are four ways that are most prominent:
Fixed-Fee: In a fixed-fee agreement, a flat payment is made to handle all customer service interactions. Usually, specific constraints are placed on the deal to make sure the volume does not change too much during the lifetime of the deal.
FTE-Based: Many deals are structured based on the number of hours spent by full-time employees (FTEs) of the customer service provider. Under this model, the cost is directly tied to how long it takes to respond to all customer service interactions. On the one hand this is very fair and equitable, but on the other hand, it gives some incentive for the customer service to draw out customer service interactions.
Transaction-Based: This type of deal is based on the number and type of transactions carried out by customer service representatives. This model also has some natural logic to it. However, the only downside is it provides an incentive for agents to find solutions that delay the issue and require more calls, rather than resolving the issue entirely.
Performance-Based: This type of deal varies the amount of payment based on customer service representatives’ performance on a number of key metrics. While this deal is great for outsourcers, customer service providers will rarely agree to it as the sole deal type. Usually, a deal will include some other deal-type and blend it with performance metrics.
Because of all these considerations, it is necessary to know exactly what you are looking for before you can estimate the cost of outsourced customer service cost. If you would like a free consultation, contact us today.